We found out that the company generated $404.4 million in revenue in 2016 (up 6x year-on-year), that it has 158 million daily active users, but also that its daily active user growth was flat in the quarter to September 30, 2016.

That was the same quarter in which Instagram launched its Snapchat-clone Instagram Stories — allowing users to share videos and photos that disappear after 24 hours. Instagram says the feature is used by 150 million users each day, which is a very similar number to Snapchat’s total daily active user base.

In the “risk factors” section of Snap Inc.’s S-1 filing, the company concedes that it competes with companies like Apple, Facebook, Instagram, WhatsApp, Google, and Twitter — all of which have “significantly greater financial and human resources and, in some cases, larger user bases.”

The S-1 continues:

“Snapchat is free and easy to join, the barrier to entry for new entrants is low, and the switching costs to another platform are also low. Moreover, the majority of our users are 18-34 years old. This demographic may be less brand loyal and more likely to follow trends than other demographics. These factors may lead users to switch to another product, which would negatively affect our user retention, growth, and engagement … Falling user retention, growth, or engagement could make Snapchat less attractive to advertisers and partners, which may seriously harm our business.”

So if rivals have bigger user bases and the financial and human resources to build copies of the products that make Snapchat stand out, what is it that Snapchat offers advertisers that they can’t get from any other platform?

We asked a range of media buyers to find out. People in the advertising industry seem impressed that there is a new player on the block that is challenging the market to produce new formats and meaningful metrics — but the young advertising business still has a long way to go if it is to start commanding the kind of ad spend that Facebook and Google can.

Jason Stein, CEO of social media agency Laundry Service, said: “Snap is the sexy new platform and to succeed on Snapchat as a brand is to be cutting edge, relatable, and relevant to young people. You’re seen not only as making the effort to speak to this youth audience on their terms — but a brand that is actually ‘young’ and cool enough to do so.”

Noah Mallin, head of social North America at WPP media agency MEC, said Snapchat offers an impressive and growing suite of ad products that taps into three of the “biggest obsessions consumers have right now”: messaging, augmented reality, and visual storytelling.

As Snap details in its S-1, the same team that designs Snapchat’s consumer products also designs its advertising products, which means it creates ad products “that feel familiar to our community,” like full-screen videos, Sponsored Lenses, and Sponsored Geofilters.

That’s a compelling story for advertisers, according to Mallin. But Facebook offers messaging products through Messenger and WhatsApp, and augmented reality and visual storytelling through Instagram. What makes Snapchat so different?

Mallin responded: “It’s across different platforms with Facebook rather than all Facebook in one place — for now — and the augmented reality elements aren’t yet part of the core experience there. Another big difference is that what binds people to Snapchat initially is the camera-first messaging experience. Messenger is trying to pivot there but that really isn’t the core of any of Facebooks products hook users with — at least not yet.”

Dear said: “Working with entertainment brands, it’s important for someone to hear sound, which isn’t that common an offering in the [digital ad] market at the moment … Snapchat is also about telling a different brand story. The behaviour on the app is very different as you want to focus more on shorter content, whereas on Instagram, people tend to watch longer videos.”

Dominique Delport, global managing director of the Havas Media Group, has also been impressed that Snapchat has created its own ad currency, forcing advertisers to be creative.

He said: “Even media publishers that are part of the Discover [content section within the Snapchat app] had to completely rethink the way they present their content because Snappers skipped it in three seconds. They have been instrumental in imposing the vertical video format — again, smart and insightful. [There is a feeling] that Facebook and Instagram are chasing them big time — and there was an impact in the last quarter — but I’m very optimistic on their ability to create, surprise, and delight their audience — and the Adland community.”

Snapchat needs to constantly prove its advertising actually works

But being the cool new thing with never-before-used ad formats comes with challenges: The company needs to constantly create cool new things and Snapchat needs to consistently prove its ads actually work if it is to move from the small experimental section of advertisers’ budgets and into the big leagues.

Snap Inc./SECSnap included research from Advertiser Perceptions in its S-1 document that showed it ranked first in overall advertiser satisfaction in September 2016.

Snap has been making huge improvements in this area and it now offers 15 different third-party measurement solutions in the US, including partnerships with companies like Nielsen, Moat, Oracle, and Millward Brown. The S-1 also details its internal “Snap-to-Store” measurement product that uses the location-based features of the Snapchat app to determine whether people who saw an ad on the app went on to visit a retail store.

But, with its relatively young advertising business (it only began selling ads at the end of 2014), Snapchat is playing catch-up to its digital media rivals. And even the two most dominant players — Facebook and Google — get accused of “marking their own homework” when it comes to advertising measurement. Advertisers take a lot of convincing to shift their budgets from the traditional channels they have been using for decades to build their brands.

Despite their gripes, most people in the advertising industry want to see Snapchat succeed. A successful Snapchat serves as competition to the digital duopoly that is Google and Facebook.

The7Stars’ Dear said: “Overall, it’s positive to have multiple platforms forcing each other to improve. Whether it’s [measurement] reporting, being more transparent, including Moat reporting — I feel if they weren’t all challenging for the same budget, there wouldn’t have been such a push towards things like transparency.”

To keep winning those budgets, Snapchat needs to stay on the front foot so that even if competitors do mimic its products — or if a new upstart launches — it has enough new features to keep users and advertisers coming back. Arguably, it’s a challenge that every ad-funded consumer business faces. But with Snap Inc. becoming a public company this year, whether it can meet that challenge will soon be laid bare for all to see.